Quiz 2

Question 1

1. Total output in an economy increases when each person specializes because
   a. there is less competition for the same resources.
   b. each person spends more time producing that product in which he or she has a comparative advantage.
   c. a wider variety of products will be produced within each country due to specialization.
   d. government necessarily plays a larger role in the economy due to specialization.

Answer 1

ANS: B

Question 2

What is Andia’s opportunity cost of producing one pound of beef?

a. 3/5 bushel of wheat
b. 6/5 bushels of wheat
c. 4/3 bushels of wheat
d. 5/3 bushels of wheat

Answer 2

ANS: A

Question 3

What is Andia’s opportunity cost of producing one bushel of wheat?

a. 3/5 pound of beef
b. 6/5 pounds of beef
c. 4/3 pounds of beef
d. 5/3 pounds of beef

Answer 3

ANS: D

Question 4

What is Zardia’s opportunity cost of producing one bushel of wheat?

a. 2/3 pound of beef
b. 3/4 pound of beef
c. 5/6 pound of beef
d. 3/2 pounds of beef

Answer 4

ANS: D

Question 5

What is Zardia’s opportunity cost of producing one pound of beef?

a. 2/3 bushel of wheat
b. 3/4 bushel of wheat
c. 5/6 bushel of wheat
d. 3/2 bushels of wheat

Answer 5

ANS: A

Question 6

Andia has a comparative advantage in the production of

a. wheat and Zardia has a comparative advantage in the production of beef.
b. beef and Zardia has a comparative advantage in the production of wheat.
c. both goods and Zardia has a comparative advantage in the production of neither good.
d. neither good and Zardia has a comparative advantage in the production of both goods.

Answer 6

ANS: B

Question 7

Assume that Andia and Zardia each has 60 minutes available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is

a. 3 bushels of wheat and 6 pounds of beef.
b. 3.5 bushels of wheat and 5.5 pounds of beef.
c. 4 bushels of wheat and 5 pounds of beef.
d. 7 bushels of wheat and 11 pounds of beef.

Answer 7

ANS: C

Question 8

What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300?

a. 100 magazines
b. 150 magazines
c. 200 magazines
d. 350 magazines

Answer 8

ANS: B

Question 9

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

a. the price of tennis balls increases.
b. the price of tennis balls decreases.
c. the price of tennis balls does not change.
d. there is no longer a market for tennis balls.

Answer 9

ANS: C

Question 10

An increase in quantity demanded

a. results in a movement downward and to the right along a demand curve.
b. results in a movement upward and to the left along a demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.

Answer 10

ANS: A

Question 11

When we move along a given demand curve,

a. only price is held constant.
b. income and price are held constant.
c. all nonprice determinants of demand are held constant.
d. all determinants of quantity demanded are held constant.

Answer 11

ANS: C

Question 12

Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?

a. a decrease in the price of DVDs
b. a decrease in the price of DVD players
c. a change in consumer preferences toward watching movies in movie theaters rather than at home
d. a decrease in the number of people in the United States

Answer 12

ANS: B

Question 13

If macaroni and cheese is an inferior good, then an increase in

a. the price will cause the demand curve for macaroni and cheese to shift to the left.
b. the price will cause the demand curve for macaroni and cheese to shift to the right.
c. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the left.
d. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the right.

Answer 13

ANS: C

Question 14

Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for tennis racquets?

a. an increase in the price of tennis balls
b. an expectation by firms that the price of tennis racquets will increase in the very near future
c. a decrease in the price of tennis racquet strings
d. a decrease in the number of firms selling tennis racquets

Answer 14

ANS: C

Question 15

Which of the following events would cause a movement upward and to the right along the supply curve for mangos?

a. The number of sellers of mangos increases.
b. There is an advance in technology that reduces the cost of producing mangos.
c. The price of fertilizer decreases, and fertilizer is an input in the production of mangos.
d. The price of mangos rises.

Answer 15

ANS: D

Question 16

If a surplus exists in a market, then we know that the actual price is

a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
b. above the equilibrium price, and quantity demanded is greater than quantity supplied.
c. below the equilibrium price, and quantity demanded is greater than quantity supplied.
d. below the equilibrium price, and quantity supplied is greater than quantity demanded.

Answer 16

ANS: A

Question 17

When a shortage exists in a market, sellers

a. raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated.
b. raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.
c. lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated.
d. lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

Answer 17

ANS: B